Insolvency & BankruptcySuspension of IBC Provisions Extended by 3 Months

Finally, from 25th September,2020 onwards ,an extension of 3 months has been given towards the suspension of Section 7, 9 & 10 of IBC.

The 3 months will lapse on 25th December,2020.It is very much in line with an expectation as an additional 6 months would have been very high otherwise.

The sole reason behind this suspension is to save businesses from the wrath of insolvency. This is a welcome step especially when pandemic of Covid-19 has stalled almost every business and liquidity crunch is still an alarming issue. Hence, a further period of 3 months will be a big relief for the industries at large.

The another important question which needs to be addressed is as to whether after 3 months whether there will be a reduction of ceiling limit from Rs 1 Crore or it will remain the same.It is pertinent to note that in pre-Covid-19 era, two slabs i.e Rs 5 lakhs for MSME and Rs 25 lakhs for bigger units were being explored as per the recommendation of a task committee on the reforms of IBC.

However, it will be a matter of further review given the fact individual and partnership insolvency were on card in year 2020 itself but now it seems that it will be pushed to next financial year rather.

The coming times will see major changes in the ecosystem of IBC.

Any query related to this can be sent to info@amlegals.com